Why your in-hand salary is lower than CTC ÷ 12
CTC (cost to company) is everything the employer spends on you in a year, not what you're paid. Several parts of it never reach your monthly salary:
- Employer PF — 12% of basic (or of ₹15,000 if your employer caps it) goes to your EPF account, not your salary.
- Gratuity — usually shown as 4.81% of basic. It's paid only when you leave, and only if you're eligible.
- Variable pay — shown at 100% in the CTC, but paid once or twice a year based on performance, often below target.
- Joining or one-time bonuses — inflate first-year CTC but don't repeat, and may have a clawback if you leave early.
- Benefits — insurance premiums or meal cards counted inside CTC aren't paid as salary.
From the fixed salary that remains, your own PF contribution, professional tax and income tax (TDS) are deducted every month.
New vs old tax regime for FY 2026-27
New regime (the default): no tax up to ₹4 lakh, then 5% to ₹8 lakh, 10% to ₹12 lakh, 15% to ₹16 lakh, 20% to ₹20 lakh, 25% to ₹24 lakh and 30% above. A ₹75,000 standard deduction applies, and the Section 87A rebate makes tax nil if taxable income is up to ₹12 lakh — so a salary of up to about ₹12.75 lakh pays no income tax. Most other deductions (HRA, 80C, 80D, professional tax) aren't allowed.
Old regime: no tax up to ₹2.5 lakh, then 5% to ₹5 lakh, 20% to ₹10 lakh and 30% above, with a ₹50,000 standard deduction and a rebate up to ₹5 lakh taxable income. It allows HRA exemption, 80C (up to ₹1.5 lakh including your PF), 80D and professional tax — so it can still win if you pay high rent and invest the full 80C limit. The calculator compares both and shows the lower one.
How the labour codes affect your salary structure
The four labour codes took effect on 21 November 2025. Under the Code on Wages, allowances excluded from "wages" can't exceed 50% of total pay, so many employers have moved basic pay to around half of CTC. A higher basic means higher PF and gratuity — more retirement savings, but often a slightly lower monthly in-hand for the same CTC. Change "Basic pay as % of CTC" in the structure options to see the effect.
What this calculator assumes
- Resident individual below 60, salary as the only income, FY 2026-27 rules.
- Variable pay and one-time bonuses are taxed in the year they're paid; monthly in-hand covers fixed pay only.
- Not included: employer NPS (80CCD(2)), home loan interest, perquisites, other income, and the ₹7.5 lakh cap on tax-free employer retirement contributions.
- Professional tax varies by state and salary; enter the figure from your payslip if you have one.
This is an estimate for comparing offers, not tax advice. Your payslip and Form 16 are the final word.
Comparing offers?
- How to negotiate a job offer in India — CTC breakdown, joining bonus and notice buyout.
- Notice period in India — buyouts, early release and final settlement.
- Notice period buyout calculator — what leaving early would cost under your employer's rules.
- Employee reviews by industry — what it's actually like to work there.